Iranian media on Friday boasted that sanctions relief provided under the interim Joint Plan of Action (JPA) has allowed the country's crude oil exports to "soar," carrying remarks by Iranian Deputy Oil Minister Mansour Moazzami revealing that "the volume of crude oil and gas condensate exports has doubled." The PressTV report gestured toward figures recently released by the International Energy Agency (IEA), which calculated that Iran's February oil exports had hit a 20-month high and were far in excess of the levels set by the JPA's "sanctions cap." Meanwhile a separate PressTV article bragged that private Indian refiner Essar Oil - which it described as "Iran’s top Indian client" - had "imported six times more crude oil from the Islamic Republic in March 2014 compared to March 2013." The outlet noted that the amount was "the highest monthly shipment since at least January 2011." Reuters had already reported by the end of March that Iran was expected to exceed the sanctions cap for the fifth straight month. The White House has insisted that it would continue to enforce remaining sanctions on Iran in order to preserve Western leverage in the context of ongoing nuclear talks. Administration officials have brushed off Tehran's sanctions-busting energy exports by declaring that they expect the flow of Iranian oil to dramatically decrease in the coming months, such that by the end of the JPA's six-month period the average amount of exported oil will have fallen within permitted levels. It is not clear what the administration will do if Iran continues behaving exactly as it is behaving. February - the fourth month in a row that Iran had busted through the sanctions limits - had already seen analysts calling for the administration to take action on the issue. Nat Kern, head of the Washington-based energy consulting firm Foreign Reports, had told the Washington Post that the pattern of oil exports "should be a red flag for the administration." He went on to emphasize that U.S. options would be severely constrained - "the horse would be out of the barn" - if "at the end of May... Iran has punched such a deep hole through the core sanctions on oil."

Israeli and Arabic outlets on Friday published reports, first printed the day before by journalists in Thailand, revealing that authorities had disrupted a Hezbollah terror plot targeting Israeli tourists traveling through the country during the Passover holiday season.Bangkok Post carried descriptions of the suspects, Lebanese-French national Daoud Farhat and Lebanese-Filipino national Youssef Ayad. Both men were traveling on non-Lebanese passports, and records seem to indicate that the current trip to Thailand was Ayad's 17th visit to the country. The data points will likely reinforce analyst concerns that Hezbollah has invested heavily in the development of tradecraft, especially in the context of the Iran-backed terror group's multiple plots against Israeli tourists. A source told the Bangkok Post that Thai authorities believe there are at least nine other Hezbollah terrorists inside Thailand, and that efforts to track them down were ongoing. Lebanon's Daily Star specifically cited both elements - the evidence of extensive preparation and the nine still-uncaptured Hezbollah operatives - in a short write-up about the incident. TIMEcontextualized the plot alongside a previous Iranian-driven terror attack planned for Bangkok, and in turn contextualized that plot alongside others "against Israeli targets in Azerbaijan, Georgia, and India... [and others that] were thwarted in Kenya, South Africa, Cyprus and Bulgaria – and Texas."

Lebanon's Daily Star reported early Friday morning that the Syrian army had launched what the outlet described as "a series of artillery strikes" on the Lebanese town of Tfail, sending Lebanese residents and Syrian refugees who have taken shelter in the town "flee[ing] into the surrounding hills." A Hezbollah-backed offensive on Syrian territory had driven refugees across the border and into the town, and reports indicate that the shelling caused many to flee back across the border and into the surrounding hills for shelter. An aid worker reported that "the village was bombarded throughout Tuesday." Tfail is technically a Lebanese territory with Lebanese citizens, but the only reliable roads connecting it to the outside world run through Syria. Those roads have been closed off by Hezbollah forces in an attempt to stem the transit of rebel elements back and forth across the Lebanon-Syria border. Lebanese Interior Minister Nouhad Machnouk was quoted Friday by the pan-Arab Ash-Sharq al-Awsat newspaper declaring that Beirut was coordinating with Hezbollah to allow residents to flee the town. Syrian forces also attacked the Lebanese city of Arsal on Thursday, dispatching a helicopter to conduct at least two air raids. Hezbollah has been heavily criticized by a range of Lebanese figures for entangling the country in Syria's three-year-long conflict, but regime attacks on Lebanese territory are particularly problematic for the organization. The Iran-backed terror group justifies its existence - and more specifically, the massively armed state-within-a-state that it maintains inside Lebanon - as necessary to protect Lebanese sovereignty and prevent attacks on Lebanese territory. Attacks on Lebanese towns by the Assad regime, to which it has provided critical assistance, are in tension with those claims.

President Barack Obama on Friday signed into law legislation - previously passed unanimously by both the House and the Senate - that would among other things prohibit Iran's pick for its next U.N. ambassador from entering the United States. Hamid Aboutalebi was a member of the Muslim Student Followers of the Imam’s Line in 1979 when the group seized scores of Americans inside the U.S.'s Tehran embassy, and the revelation that he had been appointed by Tehran prompted quick action in Congress to bar him. Politico opened its article on today's developments by observing that "the president noted he still considers the law 'advisory'" but that the legislation "was a rare moment of consensus in D.C." The issue is politically and diplomatically complicated for the White House. Domestically, administration officials fighting against Congressionally imposed pressure on Iran have leaned heavily on the argument that it is critical for the U.S. to maintain a positive diplomatic atmosphere to avoid hampering ongoing nuclear talks. Appointing a figure linked to the embassy hostage crisis to a U.S.-based post has been taken as a sign that the Iranians do not perceive themselves as similarly constrained. Internationally - per Washington Institute Managing Director Michael Singh - accepting the perceived Iranian slight and allowing Aboutalebi to take up his post would "reinforce the impression among regional allies that Washington is willing to ignore Iranian misbehavior in [the] pursuit of a nuclear accord." Iran has indicated that it will not consider any alternatives to Aboutalebi, and earlier this week it requested that the U.N.'s Committee on Relations with the Host Country meet to address the issue.

Iran's ambassador to Russia, Mehdi Sanaei, on Wednesday announced on Facebook that Iranian Foreign Minister Mohammad Javad Zarif will visit Russia next week to participate in a conference on Caspian energy and that the country's president, Hassan Rouhani, would follow in September for a similarly themed meeting with counterparts. The Times of Israel read the announcement against the backdrop of warming Iranian-Russian ties, noting that Tehran and Moscow are "close allies" and are supporting Syria's Bashar al-Assad regime and cooperating on the development of Iran's atomic program. The developments are also likely to be read alongside deepening concerns that tensions between the Kremlin and the West are likely to undermine international talks between Iran and the P5+1 global powers, a group in which Russia is a member. Slate international affairs writer Joshua Keating wrote yesterday that a range of geostrategic and diplomatic dynamics - from European energy considerations to straightforward retaliation by the Russians - may see the Ukraine crisis boosting Iran's prospects. Top Russian diplomats have threatened to "raise the stakes" of the crisis by shifting their stance on Iran talks, and Moscow has very publicly declared that it is in any case forging ahead with a $20 billion sanctions-busting scheme that would see Iran barter oil for goods. The Obama administration has thus far brushed off concerns that Russian calculations may see their diplomats undermining the West's approach to Iran, insisting instead that the Kremlin would "compartmentalize" various processes. At stake is the degree to which Washington and its European allies have sufficient leverage to convince the Iranians to verifiably put their atomic program beyond use for weaponization. Quantitative economic indicators, summed up this week in a new IMF report, indicate that Iran's economy has stabilized and is primed for growth "even if sanctions relief under [the interim Joint Plan of Action (JPA)] deal proves short-lived." Iranian officials on Wednesday seized on an anticipated U.N. report, which will document that Tehran is meeting its JPA obligations to dilute the most highly enriched portions of its uranium stockpile, to demand the next tranche of money promised by the JPA. Arms control expert Mark Hibbs, a senior associate at the Carnegie Endowment for International Peace's nuclear policy program, has estimated that it would take Iran roughly one to two weeks to reverse the dilution process. It is unlikely that, should Iranian lawmakers choose to do so, they would return the money.

The office of Palestinian Authority (PA) President Mahmoud Abbas on Wednesday rushed to deny reports - given to media outlets by a delegation of opposition Israeli lawmakers who had just returned from Ramallah - that the Palestinian leader had condemned a deadly Monday terrorist attack on an Israeli family, a day after Abbas's silence on the matter had been blasted by Jerusalem as deeply complicating efforts to sustain flagging peace talks. Terrorists had riddled the family's car with bullets, killing the male driver and wounding his wife and child. Abbas and other figures from his Fatah faction had through the week remained conspicuously silent on the matter, amid celebrations of the murder by other groups, triggering a harsh condemnation from Israeli Prime Minister Benjamin Netanyahu. Multiple members of Israel's Knesset parliament visited Abbas today and came back telling journalists that "it didn't take much convincing" for him to specifically condemn the Passover eve attack, to offer assistance in "the investigation of the attack," to commit "to bring[ing] those accountable to justice," and to express "his disgust from bloodshed and terrorism." Members of the Israeli delegation criticized Netanyahu for among other things failing to acknowledge that "there is a Palestinian partner in Ramallah." Abbas's office remembered the conversation differently, with spokesman Nabil Abu Ruaineh insisting that Abbas condemned violence in general but did not speak out against the attack. Israeli and American lawmakers have long expressed concerns that Palestinian leaders, up to and including Abbas, stoke violence both by failing to dampen it and at times by explicitly glorifying it. Peace talks originally scheduled for Wednesday were pushed back at the request of the United States.

Turkey's Hurriyet Daily News disclosed on Wednesday that figures from European and U.S. defense firms have been heavily lobbying their counterparts in Turkey's defense industry for help in blocking a controversial move by Ankara - announced last September, only to be met with immediate pushback by the West - to purchase a missile defense system from a Chinese company blacklisted by Washington for violating anti-proliferation measures. The FD-2000 system, made by China Precision Machinery Import-Export Corporation (CPMIEC), would have to be integrated with Turkey's existing defense assets. One top NATO official has described the dynamic as being equivalent to implanting a Chinese computer virus inside NATO's command and control infrastructure, and then-NATO Secretary-General Anders Fogh Rasmussen had been quite explicit that he expected the Turks to reverse their position. Last December Congress considered legislative responses to Turkey's moves, amid something of a lash-out by Prime Minister Recep Tayyip Erdogan. Hurriyet reported that officials from Western defense firms are emphasizing to top Turkish officials that it will become impossible for them to establish or maintain partnerships "in certain fields" should Ankara go through with the purchase. The Turkish Foreign Ministry announced on Wednesday that it would this week host the third "Joint Working Group" between Turkish and Chinese officials, focusing on "bilateral relations... as well as the current developments in the region and internationally." Other Turkish media outlets assessed that while no details had been disclosed regarding the various meetings, "the Turkish acquisition of Chinese long-range air and missile defense system has remained one of the most important issues between the countries" and that "talks between Turkey and China on the missile tender are expected to be concluded by the end of April."

Palestinian media outlet Ma'an conveyed comments yesterday by Hamas Prime Minister Ismail Haniyeh declaring that the kidnap of Israeli soldiers was a "top priority" for the Iran-backed terror group, statements that are bound to deepen already widespread concerns that Hamas is looking to halt a precipitous slide in its power and popularity via a spectacular operation against the Jewish state. The Ma'an report was covered by both Israeli and U.S. media outlets, which contextualized the statements in light of the 2006 abduction of Israeli soldier Gilad Shalit. Hamas used an underground tunnel to infiltrate Israel and seize Shalit, triggering Israel's Operation Summer Rains and setting the stage for 2008's Operation Cast Lead. The beginning of Israel's 2012 Operation Pillar of Defense saw the Israeli Air Force eliminate Ahmed Jabari, Hamas's "chief of staff" and the mastermind behind the operation to seize and hold Shalit. Israeli security forces have in recent months uncovered multiple similar tunnels - including elaborate structures stretching miles into Israel and costing millions of dollars - designed to facilitate new kidnapping campaigns against Israel. Last October Hamas went so far as to both claim a particularly extensive tunnel, the third discovered that year by Israeli forces, and to boast that it had been intended for use in an attack on Israel. The Jerusalem Posteditorialized that the discovery was "a reminder of Hamas’s intentions" and suggested that within "the warped internal logic of Palestinian politics, a successful terror attack or a kidnapping of an Israeli soldier or civilian would succeed in strengthening Hamas’s popularity."

A new oil contract being negotiated between China and Iran, which would see the Chinese state-trader Zhuhai Zhenrong Corp purchase light crude from Tehran, could according to Reuters boost imports from the Islamic republic "to levels not seen since tough Western sanctions were imposed in 2012," in the process undermining Western efforts to limit financial relief provided to Iran under the Joint Plan of Action (JPA) announced weeks ago in Geneva. Critics of the JPA had almost immediately raised concerns that even a limited erosion in the international sanctions regime would trigger a feeding frenzy, as nations and companies scrambled to ensure that they were not left behind in reentering Iran's markets. Those concerns were derided as "fanciful" by analysts linked to the Obama administration, while administration officials themselves blasted skeptics as uninformed. White House assurances have since come under significant strain. Most straightforwardly, the administration's assessment that the JPA would provide Iran with only $7 billion in relief appears to have neglected fundamental economic considerations including multiplier effects and the benefits of currency stabilization. Fears that a feeding frenzy will erode the sanctions regime even beyond what U.S. negotiators originally envisioned, meanwhile, have also gained traction. Actors ranging from automobile investors to Dubai have rushed to reestablish themselves inside Iran. News of the Chinese oil contract - which Reuters assesses would "go against" the JPA's emphasis on limiting Iranian oil imports to "current average amounts" - are likely to deepen fears that a downward spiral is taking hold.

Bloomberg this week reported that the open political warfare rocking Turkey, which has pitted the ruling Justice and Development Party (AKP) against followers of U.S.-based cleric Fethullah Gulen, is endangering the country's economy, "driving the currency to unprecedented lows" and tanking Istanbul's stock exchange. Turkish bonds are being dumped by investors at a pace not seen in two years, and the Borsa Istanbul 100 Index this month lost 15 percent of its value, marking Turkey's stock market literally "the world’s worst performer" in recent weeks. The outlet evaluated that the crisis, which it assessed threatens to reverse nearly a decade of economic progress made by Turkey, is at risk of becoming a downward spiral of tit-for-tat moves by the two rival Islamist camps. Gulen-influenced prosecutors have been pursuing and widening a corruption probe that has already ensnared top AKP elites, and those elites - up to and including Turkish Prime Minister Recep Tayyip Erdogan - have responded by seeking to purge the judiciary of Gulenists. Turkish media reported yesterday that the battle was "entering a new phase," per an announcement by deputy prime minister Bulent Arınc that the government was developing a plan to "do whatever necessary – legal or judicial – against" opponents in the judiciary.

The Wall Street Journal reported earlier this week that, in contrast to previous years in which successfully Israeli startups had focused on mergers and acquisitions, 2014 is shaping up to be a year in which similar companies attempt to go public. 2013 saw more Israeli startups acquired by foreign companies than any other year since 2006, with The Tower assessing in October that "announcements of multi-million and even billion-dollar acquisitions of Israeli startups [had become]... routine." The news site specifically referenced Google's billion-dollar acquisition of maps application Waze and Facebook's $100 million acquisition of data compression technology Onavo. The Journal projected that 2014, in contrast, will see Israeli startups switch to an IPO strategy. The outlet quoted Nimrod Kozlovski, a partner at Jerusalem Venture Partners, describing how "more companies in Israel now are lining up, trying to go to Nasdaq." The story also described a recent IPO by website development platform Wix.com, which last month debuted in the U.S. and raised about $127 billion. After a 70% increase in its stock, Wix.com now has a market valuation of over $1 billion. Wix.com had recently been in the news for non-financial reasons after an investigation discovered that many websites advocating anti-Israel boycotts were built on the Israeli-created platform.

The Times of Israel reported today that Hamas is being forced to reposition itself in relation to the Egyptian Muslim Brotherhood - of which it is an off-shoot - in the wake of Cairo's recent decision to brand the Brotherhood a terrorist organization, with the shift likely to deepen an emerging consensus that the Palestinian faction is adrift after a series of failed geopolitical gambles. Hamas's regional influence had enjoyed something of a high-water mark during the year-long tenure of Egypt's Brotherhood-linked former president Mohammed Morsi, but has all but collapsed since Morsi's government was removed by the army in the wake of massive anti-government rallies. The army quickly moved against not just the Brotherhood but also Hamas, which it blamed for helping the Brotherhood and for facilitating jihadist attacks in the Egyptian-controlled Sinai Peninsula. An army campaign cut off access between the Hamas-controlled Gaza Strip and the outside world, and Cairo explicitly threatened a "harsh response" should the Palestinian organization continue to be implicated in terrorism on Egyptian soil. Egyptian Ambassador to the Palestinian Authority Yasser Othman this week pointedly told Palestinian media that Hamas would be expected to untangle itself from Egyptian affairs, and that - as far as deciding which groups are terror entities - "the criterion for implementing the law on anyone is their behavior toward Egypt and the extent of their intervention in internal Egyptian affairs." Jonathan Schanzer, vice president of research at the Foundation for Defense of Democracies, suggested this summer that Hamas's weakened position provides Western lawmakers with the opportunity to strike a financial death blow to the group.

What we’re watching today:

Israeli Prime Minister Benjamin Netanyahu announced Monday that an Israeli team would be traveling to the United States to - per the Jerusalem Post - 'work on a final status nuclear deal with Iran,' amid growing criticism of moves by the Obama administration to lock Israel out of months of previous negotiations between Washington and Tehran. Netanyahu made the statements at a meeting of his Likud party today, also emphasizing that Israel's position would be oriented toward promoting and securing a comprehensive agreement that "must bring about one outcome: the dismantling of Iran's military nuclear capability." The Israeli prime minister had earlier spoken with President Barack Obama on Sundayregarding the details of this weekend's interim agreement between the P5+1 and Iran. A White House readout of the call indicated that Obama told Netanyahu "that he wants the United States and Israel to begin consultations immediately regarding [U.S.] efforts to negotiate a comprehensive solution."

News broke mid-Monday that the final details of this weekend's interim agreement between the P5+1 and Iran had not yet been agreed upon, and that the six month period during which Iran is expected to negotiate over a comprehensive deal - and during which U.S. negotiators had committed to preventing the imposition of new nuclear-related sanctions - had not yet started. Evaluating the development, The Hill pointedly noted that the interim deal's announcement had nonetheless already boosted Iran's economic position, "with the Iran's currency, the rial, jumping three percent on Sunday and oil markets sagging in expectation of increased supply." News also emerged today that the European Union may remove certain sanctions on Tehran within weeks. The sum of the developments may deepen worries that asymmetries built into the interim deal - the terms of which only require Iran to 'freeze' its nuclear program as-is, but provide irreversible concessions to Tehran - may allow the Islamic republic to pocket interim concessions and eventually walk away from further negotiations. Most straightforwardly, Iran will get to pocket the billions in financial relief its gets, which Mark Dubowitz, executive director of the Foundation for Defense of Democracies (FDD), estimated this weekend would ultimately amount to roughly $20 billion. Dubowitz and FDD senior fellow Orde Kittrie today outlined how "the agreement greatly weakens Western economic sanctions" inasmuch as "Iranian sanctions-busters will be in position to exploit the changing market psychology and newly created pathways to reap billions of additional dollars in economic relief beyond those projected by the Obama administration." The New York Times echoed the point, conveying the concerns of critics in "Congress, the Arab world and Israel" to the effect that "the roughly $100 billion in remaining sanctions will gradually be whittled away [by wily] middlemen, Chinese eager for energy sources and Europeans looking for a way back to the old days." Iran may calculate that the direct injection of capital, coupled with the economic benefits of currency gains, are sufficient to wait for the disintegration of the international community's sanctions regime.

Israeli leaders from across the political spectrum are echoing deep skepticism expressed by Israeli Prime Minister Benjamin Netanyahu regarding this weekend's interim deal between the P5+1 and Iran, after Netanyahu blasted the agreement as a "historic mistake" and committed Jerusalem to acting in the "diplomatic arena" and "in other areas" to prevent Iran from acquiring a nuclear weapon. Israeli Justice Minister Tzipi Livni, who as head of Israel's center-left Hatnuah party ran against Netanyahu and his Likud party in the last elections, described the agreement as a "terrible deal that will threaten not only us, but the entire world." Economics and Trade Minister Naftali Bennett, who as head of Israel's center-right Jewish Home party also ran against Netanyahu, not only described the agreement as a "bad deal" but emphasized that it would "increase the need for Israeli [military] action." Minister of Intelligence Yuval Steinitz, from Netanyahu's own Likud party, declared that "the present agreement could actually bring Iran closer to building the bomb."

A dispute over the degree to which Iran won enrichment concessions in this weekend's interim deal has pitted Iran and Russia on one hand against the U.S. and Britain on the other, and is threatening to severely complicate talks aimed at achieving a comprehensive agreement over Tehran's nuclear program. Iranian leader - including Iranian President Hassan Rouhani and Foreign Minister Javad Zarif - boasted over the weekend that the U.S. had caved on its long-standing position that Iran would not be permitted to enrich uranium under a final accord. The U.S. and Britain both flatly denied Iran's interpretation. The interim language, however, describes a future comprehensive solution as involving "a mutually defined enrichment program with practical limits and transparency measures to ensure the peaceful nature of the program." Observers including the Washington Post's Jackson Diehl, the Post's David Ignatius, and the Daily Beast's Eli Lake all noted that a plain reading of the language favors the Iranian interpretation. The diverging interpretations will present a challenge for U.S. diplomats pursuing a comprehensive deal. The U.S. will either have to compel Iran to change its position, which will be difficult inasmuch Iranian leaders are trumpeting the language as a core victory, or the U.S. will have to concede Iran’s position, abrogating assurances made by the administration to U.S. lawmakers and allies, and giving up on half a dozen United Nations Security Council resolutions calling on Iran to suspend enrichment. In 2009 the New York Times reported that "administration officials... said that any new American policy would ultimately require Iran to cease enrichment, as demanded by several United Nations Security Council resolutions." In 2010 then-White House spokesperson Robert Gibbs ruled out allowing Iran to enrich because "if the Iranians are sincere in a peaceful program, their needs can be met without undertaking its own enrichment program, which call into question its motives." The same year Assistant Secretary of State P.J. Crowley emphasized that Iran "continues to enrich uranium and has failed to suspend its enrichment program as has been called for in UN Security Council resolutions; that’s our core concern." The administration's lead negotiator Wendy Sherman told Congress as recently as last month that "the President has circumscribed what he means by the Iranian people having access… access, not right, but access to peaceful nuclear energy in the context of meeting its obligations."

What we’re watching today:

Journalists today continued to report on the aftermath of Senate briefings conducted yesterday by top Obama administration officials including Secretary of State John Kerry, in which the White House pressured senators to hold off imposing new sanctions on Iran in the lead-up to talks scheduled for next week. The stance has generated consternation among analysts - inasmuch as the administration had in the past placed great emphasis on the argument that the Iranians were being forced to come to the table by financial pressure - and Foreign Policy Magazine's Executive Editor Noah Shachtman today described the Hill briefing as "a shitshow." Foreign Policy's longer write-up on the meeting noted that it succeeded "in solidifying [the] GOP" against the administration's stance. Senator Mark Kirk (R-IL) had already last night blasted a deal reportedly offered to Iran last weekend by the international community as a "Chamberlain"-style agreement, and revealed Israeli assessments that Iran's nuclear program would be set back "about 24 days." Today Sen. Bob Menendez (D-NJ) piled on, rejecting the White House's stance that sanctions should not be increased. Meanwhile a bipartisan group of House representatives today called on Senate leaders to pass new sanctions. The letter, signed by 63 members, was authored by Representatives Peter Roskam (R-IL), Brad Sherman (D-CA), Michael McCaul (R-TX), and Grace Meng (D-NY). Roskam commented that "pressure brought Iran to the negotiating table, and continued strong pressure is critical to convince Iran to end its pursuit of nuclear weapons."

Hezbollah chief Hassan Nasrallah yesterday threatened that there would be a Middle East war if there is no deal between "Iran and the countries of the world," while at the same time boasting that such a deal would embolden the Iran-backed terror group and that Hezbollah "will become stronger and with a better presence locally and regionally." Tony Badran, a research fellow at the Foundation for Defense of Democracies, noted sardonically that Nasrallah sounded like he was reading from White House talking points, gesturing toward controversial remarks made by White House Press Secretary Jay Carney implying that U.S. lawmakers calling for new sanctions were maneuvering America into a "march to war." Nasrallah followed up those comments with new ones issued today in which he committed to staying in Syria until Hezbollah has secured victory for the Bashar al-Assad regime. The declaration is difficult to reconcile with recent complaints from Iranian Foreign Minister Mohamed Javad Zarif regarding the presence of foreign fighters in Syria.

Turkey is looking to finalize its purchase of Chinese anti-missile systems within six months, according to statements made today by Murad Bayar, the head of Ankara's under secretariat for defense industries. The deal would require Turkey to integrate the Chinese assets into its existing defense infrastructure, the result being - per Western defense officials - the equivalent of inserting a "virus" into NATO's command and control system. The controversy over the purchase comes as some nations are already said to be decreasing their intelligence cooperation with Ankara, after it was reported that the government of Turkish Prime Minister Recep Tayyip Erdogan had deliberately burned ten Iranians working with Israel's Mossad to uncover Iran's nuclear program. Last week Washington Institute fellow Soner Cagaptay described how Ankara is more broadly pivoting away and "has started to seek other allies, including Beijing." Nonetheless Turkey today asked NATO to extend the deployment of Patriot missiles along its border with Syria for another year. NATO is likely to accede to the request to maintain the batteries, which were deployed to contain spillover from the crisis in Syria. Egyptian outlet Al-Ahram today, echoing the consensus of analysts stretching back years, noted that Ankara "has been partly responsible for the crisis in Syria," having been one of the Bashar al-Assad regime's most significant international backers during the 2000s and then - after falling out with the regime - backing the relatively more extremist elements of the Syrian opposition.

Major Jewish organizations are investing heavily in a recently launched index fund that tracks companies with a significant Israeli presence, prompting speculation that literally billions of dollars may - according to Steven Schoenfeld, the founder and CEO of the BlueStar Israel Global Index fund - "be brought into productive investment in Israel." BlueStar launched over the summer with the intention of leveraging the Israeli investment environment, which Schoenfeld described at the time as the "best of both worlds: the superior economic management of a developed market, but with emerging market growth characteristics." Four Jewish federations or affiliated foundations have now committed to the fund, together pledging $15 million. Total endowments held by Jewish federations, affiliated organizations, and Jewish family foundations however total roughly $65 billion, and Schoenfeld described ongoing discussions with "twice that many federations." Meanwhile the Jerusalem Post today published extensive analysis describing how underwater energy reserves off Israel's coast are positioning the Jewish state to "become a player in the big energy league" and significantly alter "the Middle East political kaleidoscope."

WSJ: Saudi Arabia scaling back U.S. ties due to administration's "Syria, Iran and Egypt policies"

Syrian opposition conditions talks on Assad stepping aside, as Assad doubles down on not stepping aside

What we’re watching today:

Russian sources are signaling that a potential deal between the international community and Iran over the latter's nuclear program could allow Tehran to continue enriching uranium up to 5% purity. The rumor is consistent with repeated Iranian statements - reiterated this week by the country's Deputy Foreign Minister Araqchi Abbas - declaring that Iran will not agree to halt its enrichment activities as U.S. lawmakers and roughly half a dozen United Nations Security Council resolutions have demanded. Iran is known to possess sufficient enrichment technology to dash across the nuclear finish line starting from 3% enrichment, and it is unlikely that a deal allowing the regime to continue enriching up to 5% will be acceptable to members of Congress or to the U.S.'s Israeli and Arab allies. Writing in theWashington Post this week, Washington Institute Managing Director Michael Singh outlined how any such partial deal - which would exchange sanctions relief for a limit but not a ban on enrichment - would fail in the absence of transparency measures that Tehran seems unwilling to take. Foundation for Defense of Democracies Executive Director Mark Dubowitz has offered an alternative framework for financial relief that would be based on nonsanctions relief, and would provide the Obama administration with a mechanism for partially rewarding Iran for partial concessions without endangering the international sanctions regime. The Dubowitz proposal includes measures for imposing additional, harsh sanctions if Tehran remains intransigent.

Saudi Arabia intends to scale back the degree to which it cooperates with the United States in arming and training Syrian rebels, a decision that comes amid what the Wall Street Journal describes as "a growing dispute between the U.S. and one of its closest Arab allies over Syria, Iran and Egypt policies."Riyadh late last week declined a seat on the United Nations Security Council for similar reasons, with Prince Bandar Bin Sultan al-Saud reportedly telling diplomats that the decision "was a message for the U.S., not the U.N." The move was broadly praised by Saudi Arabia's regional allies, including Egypt, Bahrain, Kuwait, Qatar, and the UAE. Arab governments have become increasingly public in expressing frustration with the Obama administration, which they fault for withholding aid from Egypt's anti-Muslim Brotherhood interim government and for being overeager to cut a deal with Iran on the country's nuclear program. Privately, Saudi officials in Washington have expressed that they "increasingly feel cut out of U.S. decision-making on Syria and Iran." Secretary of State John Kerry met with Saudi Foreign Minister Saud al-Faisal on Monday in Paris in an effort to reassure the Saudis that the administration takes seriously the concerns of its long-time allies.

Turkish media outlets are reporting that Washington canceled the delivery of 10 unmanned aerial vehicles (UAVs) to Turkey after Ankara deliberately burned 10 Iranian spies operating inside Iran on behalf of the Israeli Mossad. The move - which is being described by Israeli observers as "the basest act of betrayal imaginable" and by U.S. intelligence officials as a staggering loss - was first reported by the Washington Post and was reportedly carried out by Turkish spy chief Hakan Fidan with the knowledge and support of Turkish prime minister Recep Tayyip Erdogan. If confirmed, the UAV cancellation would provide another data point indicating that global intelligence agencies were scaling back cooperation with Turkey in general, and with Turkey's intelligence agency (MIT) in particular. Foundation for Defense of Democracies Senior Fellow Reuel Marc Gerecht explained to USA Today that the incident would be taken as a signal that Ankara could not be trusted with intelligence information. The Post's revelation comes amid another intelligence-based controversy, this one generated by Ankara's decision to purchase Chinese missile assets. The missile batteries would need to be integrated into Turkey's current infrastructure, functionally introducing what one official described as a Chinese "virus" into NATO's command and control systems.

Syrian National Coalition President Ahmad Jarba is signaling that elements of the Syrian opposition will boycott proposed peace talks unless the negotiations' goal is to facilitate the removal from power of the Bashar al-Assad regime, after Assad stated that not only is he not considering stepping down, but that he sees no reason why he shouldn't run for reelection in 2014. The juxtaposition will likely deepen skepticism about the potential for a breakthrough at the talks, which are oriented toward ending almost three years of bloody conflict in Syria. Interviewed by Syria's Al Mayadeen TV, Assad also criticized the opposition for working on behalf of foreign powers to undermine Syria. Meanwhile, two fighters from the Iran-backed Lebanese terror group Hezbollah were reportedly killed in Syria during clashes against rebel forces.

NATO officials: Turkey purchase of Chinese air defense system would be "virus" in NATO command and control system

What we’re watching today:

The New York Times this morning piled on increasingly pointed concerns - also leveled in recent days by senators, analysts, and other outlets - regarding any deal between Iran and the West that would leave Tehran with sufficient capacity to follow North Korea's example and sneak across the nuclear finish line. Statements and leaks had indicated that Iran would offer to limit some of its future enrichment capabilities while retaining all of its already-enriched material. The Times noted that such a deal would "would have been a significant concession to the West [a year ago] but Iran’s nuclear abilities have advanced so far since then that experts say it will take far more than that to assure the West that Tehran does not have the capacity to quickly produce a nuclear weapon." The International Atomic Energy Agency (IAEA), the United Nations nuclear watchdog, has documented how over the last year Iran has installed more centrifuges, and more advanced centrifuges, significantly shortening the window it would take the regime to go nuclear. The regime's scientists are now able to create weapons-grade nuclear material out of even low-enriched uranium of 3.5% purity along a dramatically shortened timeline. Dr. Gary Samore, a senior NSC aide on nonproliferation during President Obama’s first term and president of United Against Nuclear Iran, bluntly told the Times "ending production of 20 percent enriched uranium is not sufficient to prevent breakout, because Iran can produce nuclear weapons using low-enriched uranium and a large number of centrifuge machines." Iran has asserted its absolute right to enrich uranium - a stance not recognized by the U.S. - and has foreclosed the possibility that it will export its stockpile of enriched uranium.

The deputy head of Iran’s space program announced Sunday that Tehran was planning to send a second monkey into space, deepening concerns that Iran is making steady progress in developing intercontinental ballistic missiles. The Islamic republic recently announced it was also considering a space launch that would send a Persian cat into orbit. A threat report published earlier this year by the National Air and Space Intelligence Center (NASIC) and the Office of Naval Intelligence concluded that Iran's space launch and ballistic missile programs are used to "increase the range, lethality, and accuracy of its ballistic missile force." The Pentagon had already assessed in April that Tehran could test an ICBM capable of reaching the United States by 2015. The Islamic republic last month paraded dozens of advanced missiles through Tehran, with the naval chief of the Iranian Revolutionary Guard Corps at the time boasting that Iran has the ability to destroy American navel assets.

Politico this morning outlined what the outlet dryly described as "tight-lipped" and "terse" reactions from the U.S. defense industry in response to the Obama administration's partial freeze on military assistance to Egypt. Loren Thompson, a defense consultant and chief operating officer of the Lexington Institute, was quoted worrying that the cuts "could have a devastating impact on the General Dynamics tank plant" in Ohio. Lockheed Martin has stated that it will stop work on six F-16s under production for Egypt, and that it will close its Fort Worth, Texas production line in 2017 in the absence of additional orders.Politico concluded that "if the U.S.-Egyptian relationship is patched up quickly enough, the impacts could be manageable." Last week's announcement by the White House was met with anger by Capitol Hill lawmakers, who described themselves as "blindsided" by the move, and with frustration, by the U.S.'s Middle East allies. Analysts had already begun openly worrying months ago that regional actors, worried by what they perceive as a U.S. withdrawal from the region, may pivot to the U.S.'s geopolitical rivals. Military expert Maj. Gen. Hamdi Bakhit raised the same possibility in recent days, noting that "ties with the United States are severed, there will be no problem regarding military cooperation with Moscow." He also described a range of benefits the U.S. is able to leverage due to its historically close ties to Moscow, including expedited approval for the use of Egyptian airspace and preferential treatment in moving through the Suez Canal.

Turkey's Hurriyet daily this morning published statements from NATO officials blasting the government of Prime Minister Recep Erdogan for its recently reaffirmed commitment to go through with a deal that would see Ankara complete a $3.4 billion missile defense deal with China. The deal would see Turkey purchase missile defense assets from the China Precision Machinery Import and Export Corp (CPMIEC), a company that among other things is currently under U.S. sanctions for violations of the Iran, North Korea and Syria Nonproliferation Act. The systems would require integration with Turkey's existing NATO assets. One official described the Chinese technology as a "virus" that would be let loose inside NATO's own command and control system. A NATO ambassador stationed in Ankara vented that they had " idea why the Turks do not see the simple fact that the alliance’s security threat perception in the next 20 years is based on China." A U.S. defense official emphasized that there was no reason why the National Security Agency "should give a nod to [the] crazy idea" of integrating Chinese and NATO assets. Asked about the concerns over integration, Turkish Defense Minister Ismet Yilmaz said he saw "no problem with this." NATO Secretary-General Anders Fogh Rasmussen said last week that he had expected Turkey to choose a missile defense system compatible with those of other members of the body. Turkish opposition figures have publicly worried that the Erdogan government's moves would bring Turkey-E.U. relations "to the brink of rupture."

What we’re watching today:

Iranian Foreign Minister Mohammad Javad Zarif on Monday doubled down on what Tehran is calling its "absolute right" to enrich uranium, potentially putting Iran on a collision course with U.S. diplomats as the two sides prepare for next week's multilateral P5+1 nuclear talks in Geneva. National Security Adviser Susan Rice had already said last week that the administration would not accept any deal that permitted Iran to continue enriching uranium, and the State Department subsequently stated multiple times that it considers no deal better than a deal that falls short of U.S. demands. Zarif this week also walked back diplomatic steps that had been taken in New York between Iranian figures and their U.S. counterparts. More specifically, Zarif had met with Secretary of State John Kerry and Iranian President Hassan Rouhani had spoken on the phone with President Barack Obama. The overtures were criticized by Iranian Supreme Leader Ali Khamenei, and Zarif declared - explicitly on the basis of those criticisms - that he and Rouhani had exceeded their mandate for diplomacy. The admission is likely to deepen fears that Rouhani may have overstated the case when he told NBC News in a September interview that he had "complete authority" from Khamenei to conduct diplomacy with the West. The Supreme Leader controls Iran's nuclear policy, and has clarified that whatever authority he has given Rouhani to negotiate, it does not include anything that would impede the "advancement and realization of the Islamic Revolution and System."

Top Hamas officials are expressing deep dissatisfaction with Khaled Meshaal, the head of the terror group's political bureau, for bungling the group's relationship with Iran and for thereby contributing to the worst crisis the organization has faced in decades. Veteran Israeli journalist Shlomi Eldar yesterday night published remarkable quotes from Hamas figures blasting Meshaal for living in Qatar rather than in the Hamas-controlled Gaza Strip, a proxy for overall dissatisfaction with his leadership. Recent years had seen the solidification of three regional camps: a Sunni extremist bloc made up of the Muslim Brotherhood/Turkey/Qatar, an Israel-Arab bloc aligned with the United States, and an Iran-led Shiite bloc that included Syria and Hezbollah. Meshaal had sought to align Hamas with the Sunni extremist camp, a gamble that failed to pay off as the Muslim Brotherhood collpased in Egypt and Qatar's regional position weakened. Inside Gaza a rival camp has emerged led by Mahmoud al-Zahar, who is pro-Iran to such a degree that he had already become persona non grata in Egypt before the Muslim Brotherhood was removed from power. It is unclear whether even reconciliation with Iran - which is already underway - can quickly restore Hamas's stature. Analysis published today by Orit Perlov, a research fellow at the Israel-based Institute for National Security Studies, puts the group on the brink of all-out collapse. Perlov's analysis echoes that of Washington Institute Fellow Ehud Yaari, who in July argued that diplomatic missteps and economic dislocation had triggered "one of its most testing crises ever" for Hamas. Officials from the group have themselves been forced to acknowledge that "the situation is not good and of course we are under pressure." Jonathan Schanzer, vice president of research at the Foundation for Defense of Democracies, has called on U.S. policymakers to deliver a deathblow to the now-weakened terror group.

Hezbollah reportedly has more than "200,000 missiles capable of hitting any house in Israel," according to statements made on Tuesday by the country's Home Front Defense Minister Gilad Erdan. Speaking at a conference at Bar-Ilan University, Erdan sketched out a "worst-case scenario" under which Hezbollah would saturation bomb Israel's densely packed population centers with "thousands of rockets that could last three weeks." Matthew Levitt, the director of the Washington Institute's Stein Program on Counterterrorism and Intelligence, noted that Erdan's 200,000 figure - if confirmed - would constitute "a sharp increase" over assets Hezbollah had previously been thought to possess. Erdan's statements came just days after a Lebanese report suggested that Syria's Bashar al-Assad regime had successfully transferred to Hezbollah long-range weapons capable of carrying chemical warheads. Khaled Zaher, of the anti-Hezbollah movement Future, told a Saudi newspaper that a significant number of such missiles been transferred from Syria to Lebanon with the assistance of Iranian Revolutionary Guard Corps.

North Korea announced today that it was placing its military on high alert, warning the United States of "disastrous consequences" and an "unexpected horrible disaster" after the U.S. moved naval assets, including an aircraft carrier, into a South Korean port. The vessels are in the area for a trilateral search and rescue drill with the South Korea and Japanese navies. Pyongyang's regional posture and its nuclear program have received renewed attention in recent weeks, with analysts highlighting similarities between Iran's current diplomatic strategy and the playbook that North Korea used to stall for time while it dashed across the nuclear finish line. Yesterday Claudia Rosett, a journalist-in-residence at the Foundation for Defense of Democracies, extensively documented the parallels, noting that "[n]ot only does North Korea offer terror-sponsoring Iran a model of how to get away with going nuclear, but the two have plenty of direct dealings." Iran has extensively funded North Korea's military program, to the point where the Washington Post suggested last March that Pyongyang may have used Iranian materials for a nuclear bomb it detonated in February. Ties between the two rogue regimes go beyond military cooperation, and a recent meeting of labor ministers from the two countries sought to deepen their alliance across the board.

Turkey "highly likely" to go through on China arms deal despite U.S. and NATO criticism

What we’re watching today:

Senator Mark Kirk (R-IL) on Wednesday blasted any moves to soften sanctions on Iran as a "European appeasement policy" that would boost Tehran even as "the world's leading sponsor of terrorism races toward a nuclear weapons capability." Buzzfeed notes that several other lawmakers today also expressed "skepticism" toward calls to delay new sanctions until after the next round of nuclear talks between the West and Iran, currently scheduled to begin October 15th in Geneva. Under Secretary for Political Affairs Wendy Sherman today testified in front of Congress and advocated such a delay, prompting Delaware Democratic Sen. Chris Coons to acerbically note that "this charm offensive so far to me is not charming" and Idaho Republican Jim Risch to express "no optimism" regarding the Geneva talks. Speaking Wednesday, Iranian President Hassan Rouhani reemphasized that Iranian uranium enrichment - per the Associated Press - was 'not up for discussion.' The declaration renewed fears that the revolutionary-era cleric was unwilling or unable to change Iran's long-standing positions on its nuclear program. There has been confused reporting about the degree to which Supreme Leader Ali Khamenei has empowered Rouhani to alter those positions. Rouhani has told Western audience he is "fully empowered" to negotiate a deal, and Khamenei has spoken of Iran embracing "heroic flexibility" in talks. Khamenei's office subsequently explained that "heroic flexibility" meant "advancement and realization of the Islamic Revolution and System," and Khamenei himself emphasized that Rouhani would not be allowed to make fundamental concessions.

Israeli officials have been holding meetings with top Gulf and Arab leaders, according to a Times of Israel report that describes the consultations as aimed at creating "a new alliance capable of blocking Iran’s drive toward nuclear weapons." The news aligns with recent analysis pointing to the development of three overarching blocs in the Middle East: an Iranian-led bloc that includes Syria and Hezbollah, an extremist Turkey/Muslim Brotherhood bloc with which Qatar often aligns, and a U.S.-allied bloc that includes Israel and moderate Arab states. Several Gulf states, most prominently and openly Saudi Arabia and the U.A.E., have long called for military action aimed at halting what is widely believed to be an Iranian drive to acquire nuclear weapons. Those states fear that Iranian nuclear acquisition will allow the Islamic republic to press its territorial claims in the region - Iran insists that several Arab-controlled islands and the entire nation of Bahrain are Iranian - and to provide immunity to a range of Iran-backed insurgent groups seeking to destabilize Arab governments.

Ankara is “highly likely” to sign a multi-billion dollar missile defense contract with a Chinese firm currently under U.S. sanctions, according to Turkish defense official Murad Bayar. The $3.4 billion deal with the China Precision Machinery Import and Export Corp (CPMIEC) - which has been under sanctions since February for violations of the Iran, North Korea and Syria Nonproliferation Act - could be finalized in the next six months. The purchase has generated controversy since it was announced months ago, inflaming debates about Turkey's alignment specifically with NATO and generally with the West. In July a NATO senior diplomat declared that the deal "would certainly leave many of us speechless," and this week the Turkish opposition blasted the government for risking a "rupture" with NATO by pursuing the contract. Earlier this week the U.S. let it be known that it had expressed "serious concerns" to Ankara on the controversy.

Observers are expressing worries that rallies planned by the Egyptian Muslim Brotherhood for this Sunday may turn violent, after the group issued statements on Thursday that the Associated Press described as flat-out vilifying the Egyptian army. A teenager was already killed in clashes Wednesday between Morsi supporters and opponents. The Brotherhood statement compared the military's actions to those of Adolf Hilter and the Roman emperor Nero, and was aimed at mobilizing protesters for marches in favor of Egypt's Brotherhood-linked former President Mohammed Morsi. The army-backed government, for its part, has been pressing a decapitation campaign which the Washington Post today described as having "crippled" the Brotherhood's leadership. Washington Institute fellow Eric Trager recently outlined three scenarios that are likely to unfold as the military continues its campaign against the Brotherhood. All three resulted in the functional eradication of the Brotherhood as a coherent organization operating inside Egypt's borders.

What we’re watching today:

President Barack Obama announced today that he had spoken by phone to Iranian President Hassan Rouhani, becoming the first U.S. president to speak to his Iranian counterpart since Iranian revolutionaries stormed the U.S. embassy in Iran and seized fifty two American hostages.The New York Timesnotes that Rouhani, himself a revolutionary-era cleric who subsequently spent decades as a consummate regime insider, had just days ago "declined to attend a lunch at the United Nations where American officials hoped the two presidents might shake hands." The Times also suggested that the "telephone call on Friday reinforced optimism at the White House" that Rouhani might be able and willing to change Iran's foreign policy and its posture on nuclear weapons, after Secretary of State John Kerry had already suggested that Iran and the U.S. could close a deal even sooner than the three to six month timetable floated by Rouhani. International arms control officials quoted by Bloomberg this morning expressed strong skepticism regarding the possibility that a deal could be cut in the short term. Evaluating Rouhani's Tuesday speech to the United Nations, Reuters yesterday emphasized that Rouhani had "offered no new concessions" on Iran's nuclear program. David Kenner, the Middle East editor of Foreign Policy Magazine, echoed the point in the context of Syria, noting that a speech given by Rouhani today ended without "offering the slightest prospect of a policy change." The White House briefing on today's phone call was kept on background, and so it is unclear whether Rouhani suggested a willingness to make any concessions.

The United Nations Security Council (UNSC) seemed set Friday night to adopt a resolution aimed at dismantling Syria's vast arsenal of chemical weapons, after the United States, Britain, and France were maneuvered into dropping their original demand that the measure include some means of automatic enforcement if Syria fails to comply. The result is that any future action against Damascus would require the UNSC to pass another resolution, which would in turn be subject to a Russian or Chinese veto. Moscow's insistence on limiting the scope of any mandate for current action against Syria had been a persistent sticking point in negotiations, and Reuters notes that Russian Deputy Foreign Minister Sergei Ryabkov declared victory today and boasted on Voice of Russia radio that "no concessions have been made." Syrian lawmaker Issam Khalil echoed the contention, telling the Associated Press that the U.S. failed to "impose its will" in pursuing a so-called Chapter 7 mandate that would have provided the U.N. the authority to enforce the resolution. Analysts have expressed concerns that Syria's 1,000 metric tons of chemical agents and precursors cannot be located, seized, moved, and dismantled under the current lawless conditions that reign in parts of war-torn Syria. President Barack Obama today hailed a draft of the resolution as a "potentially huge victory for the international community."

The Jerusalem Post reports that a group of European and global leaders - drawn from political, military, intellectual, and activist circles - are calling on European Union foreign ministers to reevaluate recently passed guidelines cutting off cooperation between European institutions and Israeli establishments beyond Israel's 1948 armistice lines. The letter, which was sent out last Monday, is signed by among others Jose Maria Aznar, former Prime Minister of Spain, Lord David Trimble, former First Minister of Northern Ireland and a Nobel Peace Price laurette, and Alejandro Toledo, the former President of Peru. The letter blasts the current E.U. policy as "discriminatory" and criticizes it for "prejudging the question of Israel’s borders, and in doing so... undermining the delicate negotiations that are currently transpiring." The latter critique echoes evaluations made when the measures were first passed, to the effect that the E.U. policy undermined the current U.S.-backed peace initiative between Israel and the Palestinians. The measures have also triggered strain between Israel and Europe, and European programs in Israel have suffered as a result.

At least 78 people were killed in a bombing outside of a Pakistani church Sunday, calling renewed attention to what the Daily Beast today labeled a "global slaughter of Christians." Anti-Christian violence across the Middle East and Africa has intensified in recent months, most prominently in Egypt where Islamist supporters of the country's deposed former President Mohammed Morsi have engaged in the country's worst organized anti-Copt violence in 700 years. Last week, the U.S. House of Representatives passed H.R.301 by a vote of 402-22. The bill provides "for the establishment of the Special Envoy to Promote Religious Freedom of Religious Minorities in the Near East and South Central Asia," which Christians United for Israel Executive Director David Brog described as "an important first step" to addressing religiously-driven persecution in those regions. The legislation now moves to the Senate, where it is expected to face pushback from officials who argue that the legislation would limit the U.S.'s diplomatic flexibility.